What is the SEPA Direct Debit scheme?

The SEPA scheme, or the Single Euro Payments Area, is an integration initiative set up to improve cross-border and domestic electronic payment efficiency across 34 European countries.

Prior to this, these countries had their own payment practices. The transferal of money was a fragmented and often complicated process. Transaction costs were high, delays and loss were common, and customer service differed from one country to the next. SEPA was set up to create one cross-border blanket system in a bid to boost speed and security.

How does SEPA work?

Since becoming operational in 2009, the SEPA Direct Debit payment process has encouraged the use of simple and secure overseas payments. This is particularly the case in countries such as Germany, France and Spain where Direct Debit is a very popular and established method of payment. Banks have yet to adopt SEPA Direct Debit in the UK.

The SEPA Direct Debit process is not too dissimilar to the one we know and practise for domestic payments – however, payments are only allowed to be conducted in Euros. Mandates from customers are used to authorise payments, and all transactions are communicated between banks without the involvement of card systems. The primary difference is that all payments are conducted in Euros.

Within the SEPA Direct Debit scheme, there are two branches:

  • The Core scheme:

The SEPA Direct Debit Core has been set up with all payers and payees in mind, from private individuals to small, medium and micro enterprise businesses. This scheme is mandatory in all SEPA banks.

  • The B2B scheme:

The intended usage of this scheme is solely for transactions between businesses. Unlike Core, this scheme is optional and therefore not offered by all banks. There is also no right to a refund after the Direct Debit is processed. However, it is down to the payer’s bank to ensure collection is authorised – as is not the case with the Core scheme.

The advantages of SEPA
  • The ability to determine the exact date of collection
  • Payment can be completed within a predetermined time cycle resulting in reliable cash flow
  • There is a straightforward reconciliation of payments received
  • It lets you automate exception handling (refunds, returns, rejects)
  • It’s a simple and secure means of paying bills throughout the Single Euro Payments Area
  • It provides an easy reconciliation of debits on account statements
  • And finally, payments are faster so payers avoid dealing with the consequences of late payments.

 

For more information on SEPA Direct Debits, you can visit the European Payment Council’s website.

Trust and transparency are never amiss at DFC

We take our slogan ‘we do more’ very seriously. It’s true. We do more to provide seamless cashflow solutions professionally and securely.  We work hard to keep our clients in the loop every step of the way and deliver on our promises day in and day out. Our value is rooted in clear pricing and no hidden extras.
 

More compliance

Direct Debit is the securest money transfer service available. Even so, we take as many steps as we can to make client security our top priority.

We are Trading Standards and Bacs approved, and we deem it imperative that all transactions are carried out in a protected manner. Likewise, regular safety checks are undertaken by a third party to certify that security is continuously operating at the highest standards.
 

More credit control

It is imperative that we make our service accessible to customers – we follow customers up through phone calls, letters, SMS and emails. Customers can expect an average of nine points of contact before final collection, and we will work with them to ensure this is met.
We understand that it can be uncomfortable chasing customers for payments. We take the onus off you by managing your debt collection so you don’t have to. We’ve worked hard to remove the burden of unpaid payments by opening up a range of payment options for customers. They can choose to do so online, through our dedicated call centre of through our My Payments portal.
 

More customer service

We do more to provide as many payment avenues as possible. Our call centre hours have now been extended to Saturday, and our experts are busy taking thousands of requests a day. After all, we know that you simply don’t have time to pour into Direct Debit queries. Our flexible billing frequencies allow customers to schedule payments on a weekly, fortnightly, 4 weekly, monthly, quarterly or annual basis so you can be guaranteed steady cashflow throughout the year.

 

Our mission is to help you improve your relationships with your customers so that they stay longer. You can leave us to collect your Direct Debits, while you concentrate on running – and growing – your business

Accessing the Direct Debit scheme

Like any other payment method, the Direct Debit Scheme offers its own complex maze of rules and regulations that businesses must adhere to.

Compiled by Bacs, the organisation responsible for the clearing and settlement of UK Direct Debit, the Direct Debit scheme rules act as a failsafe to ensure service providers remain fully compliant.

A breakdown of the rules can be found in the Service User’s Guide and Rules to the Direct Debit Scheme, however as a time-saver, we have condensed the key aspects below.


Becoming a service user

In order to join the scheme and become a Direct Debit service user, an organisation must first contact its bank in order to gain sponsorship. For a company to be considered for Direct Debit sponsorship, they must:

  • Have a UK sterling bank account
  • Complete and lodge an indemnity with their sponsor

The sponsor will take into account variables such as:

  • An organisations contractual capacity
  • Its financial standing
  • The quality of its administrative control

Once granted, the sponsoring bank will issue the organisation with a Service User Number (SUN), which will serve as their unique ID.


Direct Debit Instructions

At this point, service users are free to think about taking Direct Debit payments. In the first instance, a Direct Debit Instruction must be raised. This authorises a service user to collect any amount of money at any time, as long as advanced notice has been given to the customer.

It is the responsibility of the service user to ensure that any recorded information is complete and accurate before lodging it to the payer’s bank. Any rejected Direct Debit Instructions will be sent back to the service user.

It is down to the service user to ensure that all payments are collected legally, without breaching consumer protection or other legislation. Likewise, any other monetary contract between the customer and the service user falls outside of the banks Direct Debit jurisdiction.

Taking the hassle out of defaulted payments with My Payments

My Payments is DFC’s answer to defaulted Direct Debit issues.

Keeping your customers happy is front and foremost to retaining them. It’s stressful when payments are rejected, so making their lives easier at this hurdle is a sure-fire way to keep them on board.

The My Payments portal provides a quick and secure way for your customers to pay defaulted payments without any complications.
 

Monitoring payments

My Payments is integrated into DFC’s platform, as well as utilised by clients in-house. Many even provide customer access through their apps.

Members can keep track of payments and quickly rectify problems without creating extra work for those inside the business. The outcome is time saved on admin and an increase in customer experience.

46% of customers across DFC’s service choose to pay through My Payments due to its convenience and simplicity. As a result, DFC has been able to dramatically decrease call centre waiting times and place greater care on each individual.
 

A pain free process

Since using My Payments, DFC has seen over a 50% success rate in payments on members in stage one of the default process.

Payments can be taken on a number of platforms, including mobile, tablet and PC, meaning customers don’t have to set time aside to deal with the issue. This can be carried out easily whilst on the move.

Once a payment has defaulted, a link to My Payments will trigger through SMS links, email and direct URLs, making it easy for customers to locate and access.

Customers are merely required to input their postcode and reference number, which can be found on any communication from DFC. It really is that simple!